In a significant legal development, the Supreme Court of India has dismissed an appeal filed by Bharti Telemedia Ltd., a wholly owned subsidiary of Bharti Airtel, related to the levy of entertainment tax on Direct-To-Home (DTH) services. This judgment reinforces earlier decisions by various High Courts that upheld the entertainment tax as applicable on DTH operations.
The apex court’s ruling effectively closes the door for further relief on this matter for Bharti Telemedia, cementing the tax liability. As per company filings and legal disclosures, the total estimated exposure arising from this judgment stands at a substantial Rs 585 crore.
The case pertains to whether DTH services, which transmit satellite TV content directly to subscribers' homes, should attract entertainment tax, a state-imposed levy. Bharti Telemedia had earlier challenged this on grounds of double taxation, arguing that DTH was already subject to service tax (and now GST) under central laws. However, multiple High Courts, and now the Supreme Court, have ruled that entertainment tax is legally valid on DTH, given the nature of content delivery.
This judgment is likely to have implications not only for Bharti Telemedia but also for other DTH players, who may now be compelled to revisit their own tax exposures and legal strategies. It comes at a time when the traditional DTH market is already facing pressure from OTT platforms and digital streaming services.
Bharti Airtel had acquired Bharti Telemedia back in 2017, and the unit plays a key role in Airtel’s home entertainment offerings under the Airtel Digital TV brand. Though DTH remains a legacy segment, it still commands a large subscriber base in Tier 2 and Tier 3 cities.
As of now, Bharti Airtel has not issued a public statement regarding how it plans to deal with this financial exposure. The company is expected to assess the impact and possibly account for this liability in its upcoming financial statements.
While this is a non-recurring legal liability and not related to the core telecom or digital services business, it does raise concerns about litigation-related risks in legacy businesses and could influence cash flow projections for the near term.
Written by Indira Securities SEBI Registered with 30 plus years of experience in Stock Market!!!